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Fossil Group (FOSL) Fell Due to Near-Term Revenue Headwinds

Miller Value Partners, an investment management company, released its “Deep Value Strategy” first-quarter 2024 investor letter. A copy of the letter can be downloaded here. Equity markets continued to perform strongly in early 2024, following a successful 2023. The S&P 500 rose by over 10% in Q1. In the first quarter, Strategy returned 1.78% (net of fees) trailing the S&P 1500 Value Index’s 7.59% return and ahead of the S&P 600 Value Index, which was slightly positive. During the first two months, lower valuation and smaller cap stocks lagged the overall equity market. However, in March they took the lead. The Deep Value Select strategy had a weak performance in January and February, but it outperformed the Value and Small Cap indexes in March. In addition, please check the fund’s top five holdings to know its best picks in 2024.

Miller Value Deep Value Strategy featured stocks like Fossil Group, Inc. (NASDAQ:FOSL) in the first quarter 2024 investor letter. Headquartered in Richardson, Texas, Fossil Group, Inc. (NASDAQ:FOSL) designs, develops, markets, and distributes consumer fashion accessories. On May 1, 2024, Fossil Group, Inc. (NASDAQ:FOSL) stock closed at $0.8019 per share. One-month return of Fossil Group, Inc. (NASDAQ:FOSL) was -13.83%, and its shares lost 73.70% of their value over the last 52 weeks. Fossil Group, Inc. (NASDAQ:FOSL) has a market capitalization of $42.518 million.

Miller Value Deep Value Strategy stated the following regarding Fossil Group, Inc. (NASDAQ:FOSL) in its first quarter 2024 investor letter:

“Our two largest detractors during the quarter were Gray Television (GTN) and Fossil Group, Inc. (NASDAQ:FOSL), whose market share prices both fell between 28 and 30% during the quarter. Both company’s shares are significantly mispriced in our opinion, and we have recently increased our holdings.

Fossil Group (FOSL) is a micro-cap holding that is undertaking a multi-year transformation. The holding has recently underperformed due to near-term revenue headwinds from exiting their connected watch business, closing non-profitable stores and sales weakness from China. We believe management is taking the right action steps as their connected watch gross margins are well below overall company margins. Exiting the business will also allow the company to remove excess working capital and fixed costs which should have long-term positive benefits to free cash flow. With the recent senior management change, the company will also be undertaking a deeper review of the business which has the potential to remove greater fixed costs and further accelerate their transformation program, targeting $300M (25% of revenue) in total savings by the end 2025. Fossil has an underappreciated balance sheet with greater than $2/share in cash and expectations to be free cash flow positive in 2024 as the company expects to collect a $56M U.S. tax refund and monetizes non-core European assets. There are no debt maturities before late 2026, which should provide ample time for the company to further execute on its transformation plan. Fossil appears significantly mispriced at an 80% discount to its tangible book value. Success on the transformation plan should return the company to revenue growth and has potential to generate >$100M in normalized annual free cash flow. We see significant long-term upside potential, and a far higher share price.”

A model sporting a traditional watch, highlighting the timeless elegance of the company’s watch collections.

Fossil Group, Inc. (NASDAQ:FOSL) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 11 hedge fund portfolios held Fossil Group, Inc. (NASDAQ:FOSL) at the end of fourth quarter which was 12 in the previous quarter.

We previously discussed Fossil Group, Inc. (NASDAQ:FOSL) in another article, where we shared the list of highest quality affordable watch brands. In addition, please check out our hedge fund investor letters Q1 2024 page for more investor letters from hedge funds and other leading investors.

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Disclosure: None. This article is originally published at Insider Monkey.

AI, Tariffs, Nuclear Power: One Undervalued Stock Connects ALL the Dots (Before It Explodes!)

Artificial intelligence is the greatest investment opportunity of our lifetime. The time to invest in groundbreaking AI is now, and this stock is a steal!

AI is eating the world—and the machines behind it are ravenous.

Each ChatGPT query, each model update, each robotic breakthrough consumes massive amounts of energy. In fact, AI is already pushing global power grids to the brink.

Wall Street is pouring hundreds of billions into artificial intelligence—training smarter chatbots, automating industries, and building the digital future. But there’s one urgent question few are asking:

Where will all of that energy come from?

AI is the most electricity-hungry technology ever invented. Each data center powering large language models like ChatGPT consumes as much energy as a small city. And it’s about to get worse.

Even Sam Altman, the founder of OpenAI, issued a stark warning:

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Elon Musk was even more blunt:

“AI will run out of electricity by next year.”

As the world chases faster, smarter machines, a hidden crisis is emerging behind the scenes. Power grids are strained. Electricity prices are rising. Utilities are scrambling to expand capacity.

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The “Toll Booth” Operator of the AI Energy Boom

  • It owns critical nuclear energy infrastructure assets, positioning it at the heart of America’s next-generation power strategy.
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The Hedge Fund Secret That’s Starting to Leak Out

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A New Dawn is Coming to U.S. Stocks

I work for one of the largest independent financial publishers in the world – representing over 1 million people in 148 countries.

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Should I put my money in Artificial Intelligence?

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But what Marc’s most known for is his award-winning stock-rating system. Which determines whether a stock could shoot sky-high in the next three to six months… or come crashing down.

That’s why Marc’s work appears in every Bloomberg and Reuters terminal on the planet…

And is still used by hundreds of banks, hedge funds, and brokerages to track the billions of dollars flowing in and out of stocks each day.

He’s used this system to survive nine bear markets… create three new indices for the Nasdaq… and even predict the brutal bear market of 2022, 90 days in advance.

Click to continue reading…